Further Research

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Late last night heard a comment on the radio that some world banks are buying up gold and silver bullion and that China is buying gold mines. There was some hints that something is in the wind about a possible up surge of prices on these metals. Is there any truth to the BUYING surge?

Kingsley,

Hey Kingsley,

Thanks for the assignment. I will inspect the charts for Gold today and next time I will probe the charts for silver. This will be the third time since 2013 that I undertake a study of these commodities. The last was on March 12, 2014 when the price of gold was $1,349.50. Marty was concerned about a collapse of the U.S. dollar and he wanted to know if he should buy gold and silver.

The highlights of the analysis included a break above a downtrend line, a move up and through the 50 and 200-day moving averages, and base building near $1,340.00. It was recommended that Marty could consider accumulating a position. It was further advised that he ease in and buy bits at a time to confirm that that selling pressure was in fact abated. By late March the price of gold ran to near $1,400.00 but unfortunately that was all there was to the move.

You cited bullion buying by central banks, and Chinese interests buying gold miners which my research confirmed. However the downward pressure on the price of gold has continued to be fuelled by fear of an increase in U.S. interest rates. In conclusion there has been buying, but not enough to offset the selling.

Another run at the charts will inform my thoughts on the price of gold.

The three- year chart pulls into focus the downtrend that has been in place since March of last year and the death cross that formed in September of 2014. What is also worth noting is the resistance along the moving averages that has endured through most of 2015.

The six-month chart depicts the buy signals generated by the MACD and the RSI in August of 2015 as gold moved out of an oversold situation touching a low of near $1080.00. At the time of this post there are no indications that we can expect a trend reversal. The best strategy in managing this investment would be to put a scope on it and look for profitable trades similar to the one that presented itself in August.